Haiti - Economy : Mixed economic outlook according to the BRH
"[...] Transfers received from abroad increased by 16.17% in the first two months of the current quarter compared with the previous quarter and reached US $ 410.46 million. Despite the currency supply generated by the rise in the level of transfers, exchange rate pressures continued. As a result, as of June 29, 2018, the US dollar is trading against 66.91 gourdes, an increase of 2.51% compared to March 29. This development is attributable to the rise in the trade deficit and the liquidity created by monetary financing.
As of June 29, 2018, the state of public finances is marked by an upward variation in both government revenues and expenditures compared to the second quarter of the year. Indeed, during the third quarter 2017-2018, the taxes collected by the Haitian State reached more than 20 billion gourdes (20,435,690,000), an increase of 4.31% compared to the second quarter. Expenditure, on the other hand, increased from 2.19% in the previous quarter to more than 24 billion (24,923,050,000). On the other hand, the cumulative revenues from October 2017 to June 29, 2018 amount to more than 61 billion (61,649,400,000) or a collection rate of 86.32% compared to the budget forecast for 2017-2018. The cumulative expenses from October 2017 to June 7, 2018 totaled more than 80 billion (80,257,100,000) which corresponds to a realization rate of 106% compared to budget forecasts.
The gap between the level of accumulated public revenues and that of accumulated public expenditure has resulted in a deterioration of the State's position vis-à-vis the BRH characterized by monetary financing of more than 9 billion gourdes (9,666,690,000 ) as of June 30, 2018 compared to less than 9 billion (8,959,640,000) in the second quarter.
The stance of the monetary policy of the BRH, during the 3rd quarter of 2018, was in the continuation of the actions intended to minimize the fluctuations of the exchange rate and to reduce inflationary pressures in the economy. Thus, in accordance with this objective, the monetary authorities have proceded, consistent with this objective, to the systematic resumption of excess liquidity, notably through regular intervention on the foreign exchange market. Indeed, from April to June 2018, the latter resulted in sales of US $ 51.44 million, sterilizing a total of 3.39 billion gourdes over the period.
At the same time, the BRH decided, in order to provide economic agents with savings tools in gourdes with hedging against the exchange rate risk in the longer term, to modify the maturities of the BRH bonds as well as the interest rates relating thereto. Thus, from May 25, 2018, BRH bonds are issued over periods of 91, 182 and 364 days and remunerated at rates of 7%, 7.25% and 7.50% per annum, plus change in exchange rate over the holding period. In the third quarter, outstanding BRH bonds totaled 1.6 billion gourdes, an increase of 21% compared to the previous quarter.
The economic outlook for the end of fiscal year 2017-2018 remains mixed. Given the socio-political turmoil in the country in early July 2018, the relatively positive economic performance in the first six months of the year is likely to be at risk. In addition, the July-September period, which is generally considered a peak season for tourism activity, in which there is an increase in foreign exchange earnings and high room occupancy rates in the hotel sector could be affected negatively. This situation is likely to accentuate the pressures on the foreign exchange market and the inflationary trend. However, the materialization of some budget support from international donors could favor a reduction in monetary financing. In this context, the Central Bank by its mission, will remain vigilant and will continue to take the necessary measures to defend the internal and external stability of the national currency while ensuring the maintenance of the stability of the financial system.
Download the full BRH note (PDF) : https://www.haitilibre.com/docs/note_polmon3t18.pdf (in french)
The Note on Monetary Policy of the Bank of the Republic of Haiti (BRH) analyzes recent developments in the Haitian economy. Its purpose is to provide information on the direction of monetary policy and the latest decisions taken by the authorities to identify short-term prospects for the national economy.
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